think of it like this, your hard drive is one big filing cabinet, each draw in that cabinet is a partition.
now when you buy a pc it will usually come with 4 draws/partitions,
top small draw is the uefi (1st partition and is about 250 MB if memory serves and is the partition that is booted first, and holds the bootloader.)
next draw is windows system reserved (2nd partition and is about 100MB, no idea what this is used for thought it was supposed to be for page file but not sure now.)
next draw and largest is the os and all data. (3rd partition and takes up nearly all the drive lets say about 925GB on a 1TB drive, it is this partition that you can shrink if you want to create another draw or partition for just your data.)
next draw is the recovery partition. (4th partition and about 25GB, this holds all the info and programs needed to install your windows os, just like a retail install disk.)
now when you do a factory restore it will boot the 4th partition to get all the data needed to create the first 3 partitions and then install the os onto the 3rd partition.
if you do an install using a retail install disc and not the built in tools then you can safely delete all the first 3 partitions and then just let it do it's thing and keep clicking next and it will create those first 3 partitions and install itself without you needing to change or select anything else.
if you delete that 4th partition during the install using a retail disk then you will also lose for good the options to do a factory restore, (unless you made a full hard drive image before starting, this is not the same as doing an os partition image which will probably include the needed uefi and system reserve partitions anyway.) and when finished you will only have the first 3 partitions on that hard drive or a filing cabinet with only 3 draws now instead of 4. uefi, system reserve, and os
if you want to during the install using a retail disc you can delete the first 3 partitions and then create say 2 equal size partitions using that now free space 1st for the os 2nd for your data, now when you select the first of those 2 partitions to install the os to it will either automatically create another 2 partitions in that space for the uefi and system reserve and use the left over space to install the os by default or tell you it needs to create the uefi and system reserve partitions and wait for you to click ok.
so in the end you will have 5 draws/ partitions in the cabinet/ on the drive.
uefi, system reserved, os, data, factory restore.
you can have as many draws or partitions on the drive as you want (or nearly.) but the uefi and system reserve partitions will always be created when installing windows because they are needed before windows will work, along with a main draw/partition for the os location.
hope that explains how things work in a way that is easy to understand. 

should add that's with gpt filesystem and uefi, if you use the old mbr filesystem then the uefi partition doesn't get created and the partition where the os is installed becomes the first boot partition and where the bootloader will be located instead of the uefi partition but the system reserved partition will always be created with any windows os from win 7 on up during install.